Can a contract be unenforceable because it is unfair?

When can unfair contract terms become an issue?

Not every unequal bargain makes a contract unenforceable. However, certain circumstances may raise legal questions:

• Extremely one-sided obligations or remedies.
• Terms that heavily favor one party.
• Contracts signed through fraud, duress, or undue influence.
• Important terms that were hidden or unclear.
• A significant imbalance in bargaining power.
• Agreements that may violate applicable laws or public policy.

The overall circumstances often determine whether a court or other decision-maker will closely examine the agreement.

What factors may affect whether the contract is enforceable?

If the fairness of a contract is challenged, several facts may be relevant, such as:

• How the contract was negotiated.
• Whether both parties understood the terms.
• The opportunity to review or negotiate the agreement.
• The clarity of important provisions.
• The parties' conduct before and after signing.
• The applicable laws governing the contract.

A contract that appears unfair is not necessarily unenforceable, but the surrounding circumstances may influence the outcome. 

If a court finds a contract or provision unconscionable, it may refuse to enforce the entire agreement, enforce the remainder without the offending provision, or limit enforcement of the unconscionable term, depending on applicable law.

What to do next…

1. Review the contract to identify the terms you believe are unfair.
2. Gather emails, drafts, and other records related to the negotiations.
3. Consider whether you had an opportunity to review or negotiate the agreement.
4. Document the circumstances surrounding the signing of the contract.

What to consider in your specific situation

• The type of contract and the nature of the business relationship.
• The specific terms that seem unfair or one-sided.
• Whether the agreement could be negotiated.
• The bargaining power of each party.
• The events leading up to the signing of the contract.
• Applicable laws governing contract enforceability.

Since every situation is different, consider getting more information through Rocket Copilot or an attorney review to move forward more confidently.